Major development finance banks unite to help Uzbekistan implement solar projects

By bne IntelIiNews January 4, 2021

The European Bank for Reconstruction and Development (EBRD) has announced its intention to finance a 100 MW solar photovoltaic plant in the Navoi region of Uzbekistan. It will be one of the first two privately owned renewable energy projects in the country.

The EBRD is providing an equity bridge loan of up to $60mn to Nur Navoi Solar Holding for the construction and operation of the plant. The loan will allow the project investor—Masdar, owned by Mubadala Investment Company, a global investment holding established and fully owned by the government of Abu Dhabi—to borrow the amount of equity it is putting into the project.

“This innovative financial structure is currently not available from international or domestic lenders in Uzbekistan. It will be complemented by a financial package of up to $60mn arranged by the International Finance Corporation (IFC) and the Asia Development Bank (ADB). The financing package includes a senior loan of up to $20mn from IFC’s own account, financing of up to $20mn from Canada-IFC Blended Climate Finance Program and a loan of up to $20mn from the ADB. IFC will also provide up to $1mn in interest rate swaps”, EBRD said in its press release.

Another substantial project was announced by The World Bank Group. Loans and insurance agreements signed between The World Bank Group, Abu Dhabi Future Energy Company – Masdar, and the ADB are aimed at financing the construction of Uzbekistan’s first 100-megawatt solar photovoltaic station.

The International Finance Corporation (IFC) and ADB are expected to spend up to $60mn to finance this project. The World Bank intends to provide a $5.1mn bank guarantee to the government of Uzbekistan. It will be used to secure the financial obligations of the national electricity grid of Uzbekistan under the electricity purchase agreement signed with Masdar to cover the risk of non-payment for the supplied electricity.

It is planned that 300,000 photovoltaic panels of the power plant, located on a site of 268 hectares, 35 km east of the city of Navoi, will begin to supply the generated energy to the electrical networks of Uzbekistan in 2021. The plant will annually produce 270 gigawatt-hours of electricity from solar energy per year, which is enough to supply more than 31,000 households with electricity. In addition, its operation will prevent the emission of 156,000 tonnes of greenhouse gases per year. 

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